Look forward, not backwards. Graphite stocks are on the bargain counter. Instead of running, buy the cheapest- Graphite One Resources (GPH.V). Exploding graphite demand from green energy technologies can boost demand many times current production. With China restricting exports and consuming most of its own output, the rest of the world is scrambling for more reliable sources. The slowly recovering world economy will bloom again. Then the largest graphite resource in North America will not still be valued at a pittance in the stock market. Graphite One's hoard will become a bonanza! GPH.V is Bob F's personal new Favorites of the Famous pick.

April 2, 2013

Bob Flaherty Rides Again!

Welcome to our 34thFlaherty Special Situation Newsletter. Coming attractions: Here is the question that will dominate our upcoming Favorites of the Famous issue: "If You Could Love Only One..." For 18 out of our last 23 efforts, our annual Flaherty's Favorites of the Famous panel of money managers and financial journalists has beaten the S&P 500 index. This long-term performance is unequalled on the planet and is the best record of its kind.

Now in our upcoming Favorites of the Famous issue our old friends have come up with a diversified global portfolio of a lucky 13 new favorite stocks to hold over the next 12 months. Our late guru Sir John Templeton used to call this list "our treasure chest of new ideas." Truly we get HIGH with the help of our friends.

While all of the other picks of the other Favorites of the Famous panelists will not be revealed until the debut of our next issue in a few days, my own personal favorite stock choice is the subject of this current issue. I had a gold stock tucked away to select. But memories of my early days starting out as a reporter at Forbes reminded me of what I had learned and more importantly of what I have forgotten.

My teacher at Forbes was its late great editor Jim Michaels. He was a contrarian. He kept looking at news reporting and ranting everyone was looking backwards. But what readers really needed to know was what would happen in the future. Don't be lazy. Instead of looking backwards, let us think and look forward!

Sounds easy. Why don't more of us do? Recalling Jim's inspiration to be more creative I switched my pick to a bargain-priced graphite mining start-up. The price of gold is determined by shifts in emotion. In periods of unexpected panic gold soars and I also am sure the price will increase over time as the purchasing power of dollar relentlessly continues to decline.

But the market forces which should propel the price of graphite are even more powerful. The annual demand for graphite, now valued in the ground at absurdly low amounts, will soar many times above current output over the next decade. Consider emerging green energy technologies like lithium ion batteries in familiar consumer products like cell phones and digital cameras , electric and hybrid vehicles , fuel cells, pebble bed nuclear reactors and solar power. Each one alone could potentially use up the current annual supply of graphite. An offshoot of graphite, Graphene is described as having miraculous properties like being hundreds of times more powerful than steel, more flexible than rubber and almost invisible.

Where will all the new graphite come from? China has a lock on 73% of current output. It plans to use its resource which is dwindling both in quantity and especially in quality mainly for own needs and make the rest of the world pay up for what is left over. Runner up producers India with 12% and Brazil with 7% will use up most of their own output too.

The sleepy USA which imports virtually 100% of its graphite will have to wake up. It needs to encourage domestic development of graphite supplies to bring home all those potential green energy jobs.

So far Graphite One Resources is the sole successful graphite explorer and developer in the U.S. Graphite One, so named because it has a huge inferred resource in Alaska that is largest in North America and one of the largest in the world, is on the stock market bargain counter. Tomorrow when the boom from budding new green energy technology uses kicks in, their graphite hoard will turn into a bonanza.

Graphite One Resources is not only our featured stock for this issue, but it is also my personal new Favorites of the Famous pick to hold for the next 12 months. By coincidence, in writing about his own selection, one of the other Favorites of the Famous panelists Scott Phillips described what I am attempting to do with my pick of Graphite One far better than I could have explained it myself. "Sir John Templeton warned that investors mistakenly asked where the outlook is best, but instead should focus on where it is worst if they want to find a bargain."

A year from now it will be interesting to see if Scott's new Favorites of the Famous pick in steel or my pick in graphite turns out to be the better bargain!

The goal of a Flaherty Special Situation is a gain of 50% to 100% over two years. On April l, 2013 the stock of little-known Graphite One Resources was down 55% from its 12 month high to about C$0.19. We believe investors can achieve our target of a 100% gain and astute patient ones have an excellent chance of achieving much more.

Twice back in March 2012 and November 2007 shares of Graphite One Resources soared over C$0.40 when graphite prices got hot. Over the next five to ten years the demand for graphite is going to soar and the highly volatile price of graphite should not only rise but set new records.

All the stocks of the producing graphite companies will benefit. On a fast track to become one of them and to open a mine in 2017 Graphite One - the most relatively undervalued- will yield a bonanza. We believe their management can achieve their goals. Read on and see if you agree.

If you have not already done so, please join our financial family. Simply go to our website http://www.flahertyfinancialnews.com and opt in as a reader to receive your next FREE issues of Flaherty Special Situations and also Flaherty Financial News Newsletters. You can opt out any time.

At a moment when dominant global supplier China is restricting exports of graphite, Graphite One Resources' huge Graphite Creek property on the Seward Peninsula in Alaska is on a fast track development. It is the USA's only major graphite resource and has the potential to surpass the combined output of the rest of the world's graphite producers. Can its team develop a mine by 2017? Can this number one graphite resource in North America and perhaps the world become a bonanza? The answer is, yes it can.

WOW! All that glitters is not gold. If you are lucky it might be graphite!

If you live long enough you will see everything. Ten years ago who would have dreamed that graphite, that dirty industrial commodity mineral which goes in pencils, heat resistance crucibles to make steel and common auto parts like brake linings would suddenly be labeled by the U.S. and European Union respectively as " a supply critical mineral " and " a strategic mineral ?" It's even dubbed "a miracle" and "a mineral of tomorrow!"

Why this upgraded image? High quality flake graphite is playing a crucial role in the dawning of the new age of green energy technologies. The problem is there may not be sufficient capacity to produce enough graphite to go around.

After 15 years of dumping graphite at very low prices the rest of the world stopped starting up new mines. Now China currently controls 77% of global output. Most of Chinese production is fine or amorphous graphite. Only 30% is flake and the majority is small not large flake. To increase efficiency and lower pollution China plans to form a state monopoly and consolidate over the decade from 210 operating mines down to 20.

Closing marginal producers may lead to lower production. Because most of its own graphite supply will be needed internally China now imposes 37% duty and Value Added Tax on all exports of graphite. Worried about these serious supply concerns end users are scrambling to find more reliable sources outside of China.

With graphite shifting from an industrial mineral to a scarce strategic mineral in short supply, over 80 junior exploration companies are promoting themselves as contenders to help fill the supply shortage looming in the future. But industry experts believe that very few will make it into the production stage, at least for the next cycle. It takes four to five years or often even longer to bring a grassroots exploration project to the production stage. There are all kinds of required environmental and feasibility studies that need to be completed first to firm up a resource so that it becomes economically viable and bankable.

It is a challenging time for start -ups to raise the capital to keep on a fast track to develop their projects. Yet slowing up could be disastrous. The opportunity to have a mine in production during the next graphite boom could be lost.

This development-stage mineral exploration company is currently focused on a fast-track development of its flagship project, Graphite Creek on the Seward Peninsula of Alaska. Initial drilling and aerial surveys of the property indicate that

Graphite Creek has the potential to be the world's biggest large-flake graphite deposit. Its maiden National Instrument NI 43-101 compliant resource report filed in January 2013 infers an enormous amount of high-grade graphite right at surface. In January, Graphite One filed this NI 43-101 technical report with an inferred resource

of 164.5 million tonnes ( T) at 4.61% graphite with an inferred 7.6 million T of graphite on only 2.2 kilometers (km) of its 18 km Alaskan mineralized trend. Tantalizingly, there is a huge potential resource extension on another 2.2 km of between 235 and 492 million T. At a range of 4.2% to 7.9% possibly 9.8 million to 39 million additional T of potential graphite could be identified. That still leaves about 14 km of the 18 km trend to be further explored. That is how enormous this mineralized trend may be.

"With our inferred resource and our potential, we are already far larger than anybody else and could easily exceed 1 billion T of resource," says One Resources President Anthony Huston. How much extra graphite might be there must be determined by future resource studies.

"Based on the size of the resource, flake content and potential, we believe this to be the largest reported flake graphite deposit in the world," says Huston. There are less desirable forms of graphite including synthetics which command lower prices but are more difficult to use for the emerging green energy technology products. Flake graphite with high purity is the Holy Grail for mining explorers.

Among the dozen or so probable winners, bargain-priced Graphite One has all the fundamentals for long -term success. Its world -class Graphite Creek property in Alaska is the largest graphite resource in North America. Importantly , the property offers in Western Alaska a stable pro-mining jurisdiction, accessible shipping location to the world's major graphite markets in Asia and the rest of the world, high percentage large-flake graphite which is premium priced, scalable production to meet increased future demand, low capital and operating costs and a management team experienced in mining and technology.

Since the Graphite Creek project is located close to tide water in Alaska it'll be easy for the company to supply the Asian markets. With the emergence of new green energy technologies, Huston, whose background is in technology, sees growing demand for graphite in the booming emerging economies like Brazil and India. Developed economies such as Japan and South Korea, worried about being resource dependence on China, need second suppliers. Even China may be a buyer. If President Obama's major push on to create new green manufacturing jobs succeeds, the U.S. will become a much bigger end user too.

Realize that Graphite One is very special. It is the sole successful graphite explorer in the U.S., which currently imports virtually all of its graphite. The fact that this resource has been neglected for over a century since the area produced 545 T of graphite during World War One reveals just how much of a shift is taking place in our global economy.

Right now, graphite in the ground really does not command the respect we believe it will in the future. The next supply squeeze should send graphite prices soaring to new records. At a conservative market price of $1,500 a ton Graphite One's current inferred resource of 7.8 million T of graphite would be worth over $11 billion and yet the stock recently had a total market cap of under C$20 million.

In the past the graphite market has been dominated by the steel refractory and automotive parts segments. Now new green energy technologies are taking over and increasing the price and the demand for flake graphite. Just consider ion lithium batteries, electric and hybrid vehicles, fuel cells, pebble bed nuclear reactors and solar power panels. Each has the potential to exceed the current output of 1.1million T of graphite.

Consumer electronics are being powered by lighter and more powerful lithium-ion batteries in everything from cell phones, laptops, tablets to your iPhone. You constantly hear about lithium. However, the amount of flake graphite, for example, used in lithium-ion batteries is more than 10 times that of lithium.

Electric vehicles currently represent the fastest growing segment in the U.S. auto industry. In 2012, approximately 3.3% of all the vehicles sold in the U.S. were electric and hybrid cars.

Did you know that electric car pioneer Tesla Motors' (TSLA) 2013 Telsa Model S became the first electric car to be named

Motor Trend's

Car of the Year? Did you know both the U.S. and China are aiming to get over one million electric cars on the road by 2015?

o 64% of all cars sold in the U.S. are estimated to be electric by 2030.China is planning 30 Pebble bed nuclear reactors. Renewable solar power continues to make inroads. Both will require large amounts of flake graphite. The growth of fuel cell batteries for large-scale energy storage for commercial and grid-level application is also expanding rapidly. According to the U.S. Geological Survey, fuel cells have the potential to consume as much graphite as all other uses combined.

Where will all this new graphite come from? As we have noted earlier, China has a lock on 73% of the current supply. It plans to use its resource, which is dwindling both in quantity and especially in quality, mainly for its own internal needs. The rest of the world pay up for what China has left over.

The sleepy U.S. which imports virtually 100% of its graphite will have to wake up. It must encourage development of more graphite sources so more green energy manufacturing jobs can be created at home instead of in Asia. End users of graphite and various federal and local governments have big incentives to ensure the U. S. has a graphite supply to compete globally.

A move like that by the U.S. would benefit, Graphite One. Its name includes One because it has this huge inferred resource in Alaska that is the largest in North America and potentially the largest flake graphite deposit in the world. Today Graphite One stock is on the stock market bargain counter. Tomorrow when the boom from the budding new green energy technologies kicks in this graphite hoard should turn into a bonanza.

Management must overcome serious obstacles ahead, especially obtaining sufficient financing. But do not get lost in the detail in the rest of this newsletter. We do believe that it is possible for Graphite One to enter the winners' circle with the other leading contenders. A positive side to the looming graphite shortage is there should be several winners in the race to fill the shortfall. The goal of a Flaherty Special Situation is a gain of 50% to 100% over two years. On March 29, the stock of little known Graphite One Resources was down 57% from its 12 month high to about C$0.19. We believe investors can achieve our target of a 100% gain and astute patient ones have an excellent chance of achieving much more.

Company History of Graphite Creek Property Ownership and Development

Meet a mining exploration team which went into Alaska to go for gold but switched its name and its focus to graphite. In March 2006 Graphite One Resources started up as Cedar Creek Gold. About three years ago while investigating a gold property, management became aware of something much more promising than gold.

Graphite prices were starting to catch fire after being in the doldrums for about 15 years. A local geologist mentioned a forgotten vast deposit of flake graphite also on the Seward Peninsula of Alaska. The geologist had done a study of the Graphite Creek property while surface mapping and sampling for a US Geological Survey during the 1970's to 1990's and believed it was world class. He also knew the Tweet family that held the mining rights.

In l899 23-year-old Nicholas Tweet set out from Minnesota to Nome, Alaska when that gold-rush settlement consisted only of tents, a saloon built of driftwood and a lone log cabin. Tweet prospered by exploiting the rich deposits of gold that were then strewn along the beaches of Cape Nome. His family firm N.B. Tweet and Sons has operated placer gold mines on the Seward Peninsula for over 110 years. Their search for gold also turned up property with indications of lots of graphite and claims were filed.

During the World WarOne graphite mined from the Graphite Creek property filled crucial military needs. However, demand and graphite prices fell after the war ended in l917 and the property was largely ignored

After finalizing a deal with the Tweet family, Graphite One also expanded the potential mineralized trend to 18 km in further transactions with Canadian entrepreneurs owning claims nearby. "Before we purchased this property, we took a year of doing due diligence to understand the graphite market, not only what's going on today, but also what's going to happen over the next five to ten years, "says President Anthony Huston.

After extensive due diligence in March 2012 the company changed its focus to a fast track development of Graphite Creek and on March 2012 became Graphite One Resources.

Graphite One started exploration on the property in spring 2012, with an airborne time-domain magnetic and electromagnetic geophysical survey. This was followed by surface sampling totaling 591 rock grab samples and 32 channel samples and an 18-hole diamond drill program.

The data was used to produce the maiden NI 43-101 resource estimate. The potential enormous size of the resource sent a shock wave through much of the graphite industry. After all, current annual production is only about 1.1 million T of graphite and small changes in supply or demand can trigger volatile price reactions.

"Being involved in a project like ours that has the high ability to be scalable means that we can start off a little smaller," says President Huston. "Our capital expenditures won't be as large, and be able to grow with the market," Close to the strike surface is a trend with 13.5% flake graphite with inferred graphite resource of one million T. This could become the starting place for an open pit mine. Afterwards, production could go faster or slower depending on existing market conditions.

The acquisition deal gave Graphite One an option to earn 100% interest in the Graphite Creek property, which currently consists of 129 claims covering 6,799 hectares, on payments to the Tweet family trust totaling $425,000 by March 2014. The agreement also allows for a 5% production royalty that can be reduced to 3% on payment of $2 million for each one per cent cut.

Graphite One was also required to spend $1.5 million on exploration over a three-year period. No problem. To date, the company has spent more than $4.5 million, partly to fund an aerial survey in which a helicopter picked up electromagnetic evidence strongly suggesting that the strike length extends for 18 km.

Besides size, quality is also good news. Mineralization at the Graphite Creek Property is characterized by large-flake graphite (greater than 80 mesh) within graphite-bearing schists.

Large flake graphite is the most desirable for green technologies and absolutely required for some like lithium ion batteries. The high grade graphite on the surface should mean lower initial open pit mining costs.

Over the last few years the price of high quality flake graphite has fluctuated between US$1,500 and US$3,000 per ton depending on flake size and grade. Because of the global slowdown in steel and automobiles, prices have fallen by a third but production would still quite profitable with projected costs of around $800 per T.

Finance

Summary: An excellent March 1st report by Fundamental Research outlined in depth how Graphite One is on a fast track to develop and open a mine by 2017. They assumed the mine could start with annual production 40,500 tons of graphite for 25 years. The cost to reach the operating stage would be C$130 million.

That is a big sum for a development stage company. For the fiscal year ended September 30, 2012, Graphite One had C$767,511 in cash, C$672,984 in working capital and a net loss of C$6.78 million, or C$0.09 a share.

In February 2013, Graphite One raised C$600,000 through a non-brokered private placement by issuing 4.29 million shares at a price of $0.14 per share. Each share consisted of one common share and one share purchase warrant at an exercise price of C$0.20 per share for the first two years, and C$0.30 per share for the last three years.

To keep on its fast track to production Graphite One's capital expenditure budget for the next 12 months is $10 million. This includes C$6 million for exploration to upgrade resources from inferred to the superior indicated and measured categories and the remaining C$4 million is for engineering studies, baseline environmental and permitting.

The maiden National Instrument IN 43-101 inferred resource report indicates that Graphite One could be the largest flake graphite deposit in the world. Over the next 12 months, goals are to advance its exploration efforts in order to establish a measured and indicated resource estimate and to file an important Preliminary Economic Assessment (PEA) of the Creek Graphite property by the first quarter of 2014.

How can this tiny company raise the sums needed to advance this project and open a mine?

As covered in our section on Management, officers and directors over the past 10 years have raised $250 million and Graphite Creek is a very exciting property.

"We don't need $130 million in cash," explains President Anthony Huston. "You roughly need 15% to 20% ($19.5 million to $26 million) and the rest could be financed by institutions or other sources."

Short term requirements are less. To get to pre-feasibility study with the goal of releasing it in the first quarter of 2014 is roughly $10 million. Roughly another $3 million is needed to get a bankable feasibility. Once there Graphite should have increased credibility to raise in addition another perhaps $15 to $20 million so it could then finance the rest of the $130 million from independent sources.

"We are open to exploring many financing alternatives," says Huston. "We have not gone down this road but there could be assistance from the U.S. Government or the states. President Obama is trying to create more green energy manufacturing jobs at home and the U.S. has deemed graphite as 'a supply critical mineral'.

"Financing could come from institutions or end users," Huston continues. "Obtaining a certain guaranteed amount every year of a strategic mineral in short supply should appeal to companies whose growth and product quality is dependent on graphite. Green technology companies need a stable quality flake graphite supply in what can be a chaotic market."

Because they have a short 3 ½ month exploration season in Alaska, Graphite One needs to come up with $5 to $10 million quickly to do its 2013 program. Otherwise, it would mean delay of a year.

At this stage anything can happen. We believe that in a time of impending scarcity a credible mining explorer claiming to have what may be the world's largest flake graphite deposit with a sizable amount of it exposed at a surface will not remain lonely.

The Management Team

Graphite One Resources' management and directors have collectively raised over $250 million for exploration in the past 10 years. Their management team is comprised of individuals who have substantial knowledge in mineral exploration and mine development projects as well as technology. In addition, management and directors hold about 10% of the outstanding shares. This is a good sign that upper management has confidence in the potential of the Graphite Creek project. Graphite One is part of the Gilden Group which is focused on diversified mineral exploration. Besides GPH.V, it consists of North Country Gold (NCG.V), Brilliant Resources (BLT.V), and Altiplano Minerals (APN.V).

Charles Chebry

is the CEO and chairman of Graphite One Resources and a director of Vela Minerals Ltd. Chebry was previously involved in the following mineral exploration companies: CEO, president and chairman of Altiplano Minerals Ltd., director and CFO of Happy Creek Minerals Ltd. and director of North Country Gold Corp., formerly known as CBR Gold Corp., from inception and served as president and founder of its predecessor company Arta Enterprises Inc. He is the former CFO of Kaminak Gold Corporation and Kivalliq Energy Corporation. He also served as CFO, vice president of finance and director of both Olympia Trust Company and Olympia Financial Group Inc., and remains a director. Chebry has a B.S. from the University of Alberta and is a certified management accountant.

Anthony Huston

is president and director

of Graphite One Resources. Huston has acted in roles to advise on financial and acquisition transactions in many industry sectors, including real estate development, technology, bio-tech, and most recently the resource sector. He is a successful entrepreneur with a background in business development and finance. Having served as managing partner in both public and private companies, Huston played an integral role in raising in excess of $50 million in his career. He holds a Bachelor of Commerce degree from the University of British Columbia.

Dean Besserer

serves as vice president of exploration and director of Graphite One Resources.Besserer, a graduate of the University of Western Ontario (1995), was a geological consultant since 1994 and former principal and managing director of APEX Geoscience Ltd., a geological consulting firm with offices in Canada, Peru and Australia. Besserer was formerly the managing director for Sentosa Mining Ltd., a director of Niblack Mineral Development Inc. and is currently a director of Brilliant Resources. His industry experience includes exploration and property evaluations in Canada, Australia, Russia, South East Asia, North East Asia, China, South America and Africa for numerous major and junior mining companies for commodities including gold, base metals, graphite, potash, phosphate and diamonds. He has managed exploration programs with annual exploration budgets in excess of $10 million and been the qualified person for exploration and development projects with annual budgets in excess of $30 million. Besserer is a member of The Association of Professional Engineers and Geoscientists of Alberta, and the Australian Institute of Geoscientists.

Dale Hansen

is CFO and director of the company.

Hansen has over 25 years of experience in the bitumen mining and oil and gas industry and has worked for a number of Canadian and international based energy resource companies including Suncor Energy and Koch Exploration. He is the former CFO and current director of Vela Minerals Ltd. He also served as CFO of Happy Creek Minerals and Argonaut Exploration. Hansen has a proven track record of performance at all levels of management in the resource industry and is a certified management accountant.

Peter Kleespies

is a director of the company.

Kleespies is a professional geologist registered with the Association of Professional Engineers and Geoscientists of Alberta and has 25 years of experience in mineral exploration and mine development projects. He has worked for both junior and senior companies, including Metallica Resources, BHP Minerals Canada Limited, and Miramar Mining Corporation overseeing the geological stages from grassroots to advanced stage. He has been engaged in major exploration and development projects in Canada, South America, Australia and Africa. His expertise ranges from conceptual project generation, grassroots exploration, large-scale surface and underground drill programs, bulk sampling, deposit modeling and resource estimation. Kleespies has demonstrated the application of sound technical principles and ability to integrate complex geological, geochemical and geophysical datasets in the search for, delineation and development of economically viable mineral deposits. Since 2004, he has held the position of vice president exploration with North Country Gold Corp. and formerly managed exploration projects at Hope Bay for Miramar Mining Corporation.

Brian Budd

serves as a director for Graphite One and CEO and director for Altiplano Minerals Ltd. Budd has worked with North Country Gold Corp. as a director and vice president of corporate development since joining the company in 2009. In addition to this role, he serves as corporate secretary for the company and has played an integral role in North Country Gold's financing, public relations and corporate development activities. Budd has an extensive management and corporate development background with over 25 years of entrepreneurial and sales leadership experience in the resource and high tech industries. His business acumen includes the development and execution of comprehensive business and financing plans, corporate communications programs as well as strategic planning for both the domestic and international markets.Competition

With China using up most of its own output (77%), as will runner up producers India (12%) and Brazil (7%), the rest of the world will have to seek for more reliable sources. Over 80 graphite developers are attempting to fill the void, but industry experts expect very few will make it into production. No new graphite mines were opened in the last cycle so the looming shortage could become acute and graphite prices should soar to new highs.

Among the leading companies moving to fill a production role are two with discoveries in Eastern Canada Northern Graphite Corp. (NGC.V) and Focus Graphite (FMS.V). Energizer Resources (EGZ.TO) with a huge resource in Madagascar and Flinders Resources (FDR.V) with a sizable resource in Sweden are also progressing nicely. With North America's largest graphite deposit in western Alaska Graphite One is on a fast track toward production in 2017. Once in production, Graphite One's output could exceed that of all other leading graphite producers combined. How much it will produce will depend upon the graphite market situation four years from now. Management's plan is to start with an open pit and to use its available high grade surface flake graphite. Then it can access further expansion from that point.

Risks

Graphite One will not have an operating mine until 2017 at the earliest. Access to the Graphite Creek property in Alaska is seasonal and currently limited to 3 to 4 months a year. In a very difficult capital market, Graphite One needs to raise C$10 million to C$12 million to continue its development progress over the next 12 months. Failure could set back its fast-track exploration by a year. All of Graphite One's huge world class NI 43-101 compliant resources are in the inferred category. To attract capital and long run partners existing inferred resources need to be upgraded to the indicated and measured resource categories. It is also important to delineate another 2.2 km of the strike trend to determine if another 10 million to 39 million more T of graphite could be added to its 7.6 million T inferred in the initial 2.2 km of its 18 km mineralized trend. Since its stock value has and will continue to fluctuate with the highly volatile price of graphite, Graphite One will remain a highly speculative growth stock.

Graphite One Resources Inc. is a member of the Gilden Group of companies, for more information on the group please visit the company's website: www.gildengroup.com

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Disclaimer: This Flaherty Special Situation Newsletter contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected. We caution readers not to place undue reliance on any forward-looking statements and to supplement this newsletter with specific company SEC filings and their own research. Before purchasing any shares or making an investment, readers should review the company's SEC filings, including the most recent 10-K and 10-Q, available at www.sec.gov. Please be aware that there is risk in every company stock that you buy. Coverage or other mention of a stock or fund in this newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. We are not investment dealers or investor advisers registered with the SEC or State Security Authorities. We do not guarantee all the information in this newsletter is correct or will be updated. Remember some errors are inevitable. Reproduction without written permission is forbidden. Flaherty Financial News Inc. received $7,500 from Graphite One Resources Inc. This was an editorial writing and online distribution fee for Graphite One Resources to be featured in this Flaherty Special Situation Newsletter. Our own policy forbids editorial from buying or selling a featured stock until this issue is out at least ten business days after its issue date, which in this case would be April 15, 2013. In cases where a report or profile is subsidized, readers should consider such subsidized articles as paid advertorials and understand that sponsored material will not be as objective as non-sponsored editorial. As Flaherty Financial News editor I always reserve "Final Copy Responsibility" on what to include and what to leave out of every issue. The buck stops here. We have tried to be objective, but may have failed. We are not security analysts or stockbrokers engaged in buying or selling, but financial journalists with all the many failings of that profession. You readers must decide the merits of each investment yourself and whether to invest. -Bob Flaherty, Editor

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Dear Friends: All that glitters is not gold. If we are lucky it might be graphite. That shows how much our world is changing. So imbrace change and make it your friend. Enjoy Spring and each day you are alive to do new things. It's a wonderful life!